Selling puts and collecting the premium /getting assigned

Discussion in 'Options' started by S2007S, Feb 1, 2025.

  1. S2007S

    S2007S

    I have been selling puts and collecting the premium and in some cases rolling over that option a few times to collect additional premiums...

    Say you sell 1 put at $20 and collect $100 premium ..few weeks later you roll it over and collect another $50 in premium and then do another roll over and collect another $200 in premium.

    You now have collected a total of $350 in premium...instead of buying back the option you decide to take the $20 assignment because you want to own the stock....

    What is the cost basis of the stock at assignment?

    Is it $20??
    Or is it $16.50 ($3.50 x 100= $350 worth of premium collected)

    Or are the premiums of option and additional roll overs included in the assignment?

    Original assignment at $20 -$3.50 worth of premiums collected which would bring the cost basis $16.50

    So which one is it?
     
  2. hajimow

    hajimow

    Definitely your option premium is deducted from your cost. I let my puts to expire and open a new position so I believe it should show you the cost as $20 - $2=$18 and those $50 plus $100 as separate profits. If you now sell call for $2 for $20 and it expires, it wont reduce your cost to $16 but then if you sell another $5 call for $20 after your first call expires, and if that call gets excercised, it will show that you sold it at $25 minus $18 and made $700 profit and in your gain and loss report it will report zero gaon from that $5 call and $2 put option.
     
  3. S2007S

    S2007S



    So you are saying the cost basis of the assignment will be reflected on the last option roll over?
     
  4. VOLdemort

    VOLdemort

    "Cost basis of the assignment" is not a thing. The cost basis is the strike, dude. You've shown you have mastered addition so your taxable cost basis is 16.50; unless you're magically tax-exempt wrt options. Obv short vs long term will play a role but you're clearly doing stupid sht so it's all going to be taxed ST.

    This thread is r*******.
     
  5. hajimow

    hajimow

    You will be assigned based on your strike price but if sold a put for $2 for the strike price of $20, and if it goes down to $17 and you get assigned at $20, in your account it will show that your cost basis is $18.x X is the commission that you paid for the option assuming that your option trade was not commission free.
     
  6. hajimow

    hajimow

    Yes. The only trades that I do is selling calls and puts and I see this happens when i get assigned or shares get excercised and I become short
     
  7. Great, another one-trick pony who has discovered the perpetual money-making machine glitch of free money.